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Organization and Nature of Operations, Basis of Presentation and Significant Accounting Policies | 3 Months Ended
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Jun. 30, 2026
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Organization and Nature of Operations, Basis of Presentation and Significant Accounting Policies | Organization and Nature of Operations, Basis of Presentation and Significant Accounting Policies Organization and Nature of Operations Lionsgate Studios Corp. (NYSE: LION) (the “Company,” “Lionsgate,” “New Lionsgate,” “we,” “us” or “our”), a corporation organized under the laws of British Columbia, Canada, together with its direct and indirect subsidiaries, is a standalone, pure-play content company focused on the development, production, acquisition, distribution and licensing of motion picture and television content worldwide. The Company owns a portfolio of film and television brands and franchises, a talent management and production business and a film and television library consisting of more than 20,000 titles. Reorganization and Starz Separation Prior to May 6, 2025, as further discussed below, Lions Gate Entertainment Corp. (“Old Lionsgate”) encompassed both the STARZ premium global subscription platform (the “Starz Business”) and the motion picture and television studio operations (the “Studio Business”), which was operated by its consolidated subsidiary, Lionsgate Studios Corp. (“Legacy Lionsgate Studios”) (formerly listed NASDAQ: LION), in which Old Lionsgate held an approximately 87.8% ownership interest. On May 6, 2025, pursuant to an arrangement agreement, Old Lionsgate completed the separation of Legacy Lionsgate Studios and the Starz Business (the “Starz Separation”), resulting in two independent publicly-traded companies: (i) Lionsgate Studios Corp., which now holds the Studio Business and (ii) Starz Entertainment Corp., which now holds the Starz Business that was previously held by Old Lionsgate. For accounting purposes, under United States generally accepted accounting principles (“U.S. GAAP”), Old Lionsgate was treated as the accounting spinnor and predecessor to the Company and Starz was treated as the accounting spinnee. As a result, the pro rata distribution of the Starz Business was recorded as an equity transaction and no gain or loss was recognized. The historical results of operations and cash flows of the Starz Business, previously reported as the Media Networks segment, are presented as discontinued operations for periods prior to the separation. See Note 2 for the presentation of discontinued operations, including the partial period through May 6, 2025, during the three months ended June 30, 2025. In connection with the Starz Separation, Old Lionsgate shareholders received shares of both Lionsgate Studios Corp. and Starz Entertainment Corp. based on their respective holdings of Old Lionsgate Class A and Class B shares. In addition, Legacy Lionsgate Studios shareholders (other than Old Lionsgate) exchanged their shares for newly issued Lionsgate common shares based on a defined exchange ratio (the “LG Studios Flip”). As a result, the previously reported noncontrolling interest in Legacy Lionsgate Studios was eliminated. Old Lionsgate Class A and Class B shares, as well as the Legacy Lionsgate Studios common shares, were delisted. Basis of Presentation Generally Accepted Accounting Principles The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial reporting and are consistent in all material respects with the accounting policies disclosed in the Company’s Annual Report on Form 10-K for the year ended March 31, 2026, filed with the Securities and Exchange Commission (“SEC”) on May 27, 2026. The accompanying interim condensed consolidated financial statements are unaudited, but in the opinion of management, contain all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair presentation. Interim results are not necessarily indicative of financial results for a full year. The balance sheet as of March 31, 2026 has been derived from the Company’s audited financial statements, at that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2026. Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of Lionsgate and all of its majority-owned and controlled subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Reclassifications Certain reclassifications have been made in the fiscal 2026 financial statements to conform to the fiscal 2027 presentation. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The most significant estimates made by management in the preparation of the financial statements relate to ultimate revenue and costs used for the amortization of investment in films and television programs; estimates related to the revenue recognition of sales or usage-based royalties; fair value of equity-based compensation; fair value of assets and liabilities for allocation of the purchase price of companies and assets acquired; income taxes including the assessment of valuation allowances for deferred tax assets; accruals for contingent liabilities; and impairment assessments for investment in films and television programs and goodwill. Actual results could differ from such estimates. Segment Information The Company has two reportable segments, Motion Picture and Television Production. Motion Picture consists of the development and production of feature films, acquisition of North American and worldwide distribution rights, North American theatrical, home entertainment and television distribution of feature films produced and acquired, and worldwide licensing of distribution rights to feature films produced and acquired. Television Production consists of the development, production and worldwide distribution of television productions including television series, movies, mini-series and non-fiction programming. Television Production includes the domestic and international licensing of Starz original productions to Starz Entertainment Corp., and the ancillary market distribution of Starz original productions and licensed product. Additionally, the Television Production segment includes the results of operations of 3 Arts Entertainment LLC (“3 Arts”), the Company’s talent management and television/film production business. The Company’s reportable segments are based on the distinct nature of their operations, the Company’s internal management structure and the financial information regularly reviewed by the Company’s Chief Operating Decision Maker (“CODM”). The CODM uses segment profit, as defined in Note 15, to evaluate the current operating performance of each segment, support future operating plans and forecasts and to allocate resources. The Company’s Chief Executive Officer serves as the CODM. Significant Accounting Policies There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended March 31, 2026. Accounting Guidance Adopted in Fiscal 2027 Financial Instruments: In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, Financial Instruments-Credit Losses (Topic 326)-Measurement of Credit Losses for Accounts Receivable and Contract Assets, providing all entities with a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. The practical expedient allows entities to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset when developing reasonable and supportable forecasts as part of estimating expected credit losses. The provisions differ from current U.S. GAAP as current guidance requires an entity to consider adjustments to historical credit loss experience to reflect the extent to which management expects current conditions to differ from the conditions that existed for the period over which historical information was evaluated. On April 1, 2026, the Company adopted the provisions of ASU 2025-05 on a prospective basis. The adoption of ASU 2025-05 did not have a material impact on the Company’s results of operations, financial condition or related disclosures. Recent Accounting Pronouncements Not Yet Adopted Income Statement: In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (Subtopic 220-40), requiring public business entities to disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. This ASU is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, and therefore will be effective beginning with the Company’s financial statements issued for the fiscal year ending March 31, 2028 and interim reporting periods beginning in fiscal 2029, with early adoption permitted. The disclosures required under the ASU can be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all periods presented in the financial statements. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements and disclosures. Business Combinations: In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity (“VIE”). This standard clarifies the guidance in determining the acquirer in an acquisition transaction effected primarily by exchanging equity interests when the legal acquiree is a VIE that meets the definition of a business. The amendments require that an entity consider the same factors that are currently required for determining which entity is the accounting acquirer in other acquisition transactions. This ASU is effective for interim periods within annual reporting periods beginning after December 15, 2026, and therefore will be effective beginning with the Company’s financial statements issued for the fiscal 2028 interim reporting periods, with early adoption permitted. ASU 2025-03 requires that an entity apply the new guidance prospectively to any acquisition that occurs after the initial application date. The Company will adopt this guidance and apply it prospectively to applicable business combinations occurring on or after the date of adoption. Interim Reporting: In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270) Narrow-Scope Improvements. The update provides clarifications intended to improve the consistency and usability of interim disclosure requirements, including a comprehensive listing of required interim disclosures and a new disclosure principle for reporting material events occurring after the most recent annual period. The amendments do not change the underlying objectives of interim reporting but are designed to enhance clarity in application. This update is effective for interim periods within annual reporting periods beginning after December 15, 2027, and therefore will be effective beginning with the Company’s financial statements issued for the fiscal 2029 interim reporting periods, with early adoption permitted. The Company will adopt this guidance for the interim periods within its fiscal year beginning April 1, 2028, and does not expect it to have a material effect on its condensed consolidated financial statements and disclosures. Government Grants: In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, which establishes authoritative guidance on the recognition, measurement, presentation, and disclosure of government grants. Under ASU 2025-10, government grants are recognized when it is probable that the entity will both comply with the conditions of the grant and the grant will be received. The ASU provides specific accounting models for grants related to assets and grants related to income, including options to recognize government grants as deferred income or as a reduction of the asset’s cost basis. The ASU also requires enhanced disclosures regarding the nature of government grants, significant terms and conditions, accounting policies applied, and amounts recognized in the financial statements. ASU 2025-10 is effective for fiscal years beginning after December 15, 2028, and therefore will be effective beginning with the Company’s financial statements issued for the fiscal 2030 interim reporting periods, with early adoption permitted. The Company will adopt this guidance for the interim periods within its fiscal year beginning April 1, 2029. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements and disclosures.

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